Market news

30 September 2022
  • 06:29

    The path seems to have been cleared for further dollar strength – Commerzbank

    The US dollar remains at high levels. Economists at Commerzbank expect the greenback to enjoy further gains ahead.

    There is no avoiding the dollar

    “The dollar is being supported by unshakable confidence in the Fed’s rate hike cycle and the surprisingly robust economic environment. Today’s data on personal spending and above all the labour market report next week are likely to confirm that.”

    “If the economy were to cool and the labour market turn though, there would soon be criticism of the Fed’s tight monetary policy and the strong dollar. We have not reached that point yet.”

    “In view of the enormous uncertainty about the exact effects of the energy crisis on Europe over the coming months, the lower end in EUR/USD seems much more attractive for now.”

     

  • 06:23

    NZD/USD is drifting like a cork in the tide – ANZ

    NZD/USD is a tad higher. Economists at ANZ Bank expect the pair to remain at the mercy of external forces until the Reserve Bank of New Zealand (RBNZ) meeting next week.

    Nothing local is really driving the kiwi at the moment

    “Nothing local is really driving the kiwi at the moment, and instead it’s drifting like a cork in the tide. That’s unlikely to change today either, but next week’s RBNZ MPR may provide a degree of support, especially if the RBNZ remain hawkish, which is appropriate given the inflation backdrop. But until then, the NZD is at the mercy of global forces.”

    “The pull-back in the USD DXY looks a bit odd against geopolitical developments in Ukraine, given the strength of US jobless claims (pointing to bumper payrolls next week), hawkish Fedspeak, and the very real cracks in the UK that can’t be papered over.”

    “Support 0.4895/0.5470/0.5565 Resistance 0.6160/0.6400.”

     

  • 06:20

    GBP/JPY retreats towards 160.50 despite firmer UK Q2 GDP, upbeat yields

    • GBP/JPY picks up bids during the four-day uptrend after final prints of UK Q2 GDP.
    • UK Q2 GDP improved to 0.2% QoQ, 4.4% YoY, Current Account deficit shrank as well.
    • Yields cheer recession woes, hawkish bias of the major central banks.
    • Risk catalysts eyed for further directions, bulls need validation from UK headlines, technicals.

    GBP/JPY fails to cheer upbeat UK data as it fades the upside momentum, declining to 160.85 on early Friday morning in London. In doing so, the cross-currency pair also ignores firmer US Treasury yields. The reason could be linked to Japan’s stimulus and the market’s cautious mood.

    UK’s final reading of the second quarter (Q2) Gross Domestic Product (GDP) GDP improved to 0.2% QoQ versus -0.1% previous forecasts while the YoY figures increased to 4.4% versus 2.9% prior estimations. Further details suggest that the UK’s Q2 Current Account deficit eased to £-33.768B compared to £-43.8B market forecasts and £-43.875B prior (revised from £-51.3B).

    It should be observed that the US 10-year Treasury yields remain firmer around 3.80% during the seven-week uptrend despite reversing from the 12-year on Wednesday.

    Behind the firmer yields could be the fears surrounding global recession and the hawkish commentary from the key central banks, including the Federal Reserve, the Bank of England (BOE) and the European Central Bank (ECB), despite the recently downbeat economics and supply crunch fears. Additionally, the chatters over China’s inability to tame recession woes and the UK’s fears of more economic pain due to the latest fiscal policies should have favored the US Treasury yields.

    Other than the aforementioned catalysts, headlines suggesting more stimulus from Japan, as signaled by Japanese Chief Cabinet Secretary Hirokazu Matsuno earlier in the day, as well as the upbeat Japan data. That said, Japan reported a decline in the Unemployment Rate to 2.5% in August while Industrial Production reversed the previous contraction of 2.0% with 5.1% YoY growth. Further, Retail Trade also improved to 4.1% YoY compared to 2.8% expected and 2.4% prior.

    Looking forward, GBP/JPY traders should pay attention to the risk catalysts, namely the updates surrounding economic transition, the central banks’ moves and the ones from Russia, for clear directions. That said, the yields are likely to keep the pair buyers hopeful should the British policymakers manage to convince markets of their capacity to revive the UK economy.

    Technical analysis

    A daily closing beyond the 200-SMA, around 160.45 by the press time, enables the GBP/JPY pair to poke the 162.10 hurdle comprising a 13-day-old resistance line and the 21-DMA. That said, the receding bearish bias of the MACD and recently firmer RSI (14) also favor buyers.

     

  • 06:15

    EUR/USD: Recovery seen over the past days unlikely to be sustainable – Commerzbank

    The euro was able to appreciate during the course of the trading day. In the view of economists at Commerzbank, the recovery is not sustainable.

    Doves might sound more cautious again

    “Inflation and above all core inflation is likely to remain at high levels thus requiring further aggressive monetary policy tightening. The uncertainty of whether the ECB would be willing to do that is likely to put pressure on the euro over the coming weeks.” 

    “If the ECB has to retract its comparatively optimistic economic projections as signs of a recession rise, the doves on the board might sound more cautious again.”

    “The recovery in EUR/USD seen over the past days is unlikely to be sustainable. We see the risk of the market being disappointed in its expectations of the ECB with this being reflected in falling EUR levels.”

     

  • 06:15

    Natural Gas Futures: Extra range bound in store

    Considering advanced prints from CME Group for natural gas futures markets, open interest rose for the second session in a row on Thursday, this time by around 4.6K contracts. In the opposite direction, volume went down for the second consecutive session, now by around 53.7K contracts.

    Natural Gas remains propped up by the 200-day SMA

    Natural gas prices traded on the defensive on Thursday amidst a volatile session and against the backdrop of rising open interest. That said, further consolidation still appears on the card, while the downside looks supported by the 200-day SMA near $6.50 per MMBtu.

  • 06:12

    GBP/USD skids below 1.1150 despite upbeat UK GDP data

    • GBP/USD has not displayed a sheer response to the upbeat UK GDP data.
    • The UK economy has delivered a growth rate of 0.2% and 4.4% on a monthly and annual basis.
    • The DXY has surrendered the critical support of 112.00 amid improved risk appetite.

    The GBP/USD pair has slipped below the immediate support of 1.1150 despite upbeat UK Gross Domestic Product (GDP) data. The UK National Statistics has reported the economic activities in the UK economy have grown by 0.2% against the expectation of a decline of 0.1% on a quarterly basis. Also, the annual data has improved dramatically to 4.4% vs. the projections and the prior release of 2.9%.

    The cable is auctioning in a positive trajectory despite a surprise announcement of the bond-purchase program by the Bank of England (BOE). A 13-day bond-buying program has been announced in which the BOE will purchase GBP 5 billion worth of long-dated bonds each day. At times, when the BOE is dedicated to bringing price stability, liquidity infusion could offset the impact of accelerating interest rates to some extent.

    The US dollar index (DXY) witnessed a steep fall this week after soaring expectations of a slowdown in the current pace of hiking interest rates sooner. It is worth noting that Fed’s interest rate peak is not far from current interest rates at 3.-3.325% after a scrutiny of the ongoing velocity of hiking interest rates. The Fed is expected to maintain the terminal rate at 4.6% for a longer period as discussed in the reported economic projections till it find a slowdown in the price pressures for several months.

    In September, the market reaction towards the higher-than-expected headline Consumer Price Index (CPI) and core CPI, despite falling gasoline prices, was extremely risk-averse. In retaliation to that, the Fed has announced a rate hike by 75 basis points (bps). Therefore, the impact of Friday’s US Personal Consumption Expenditure (PCE) is expected to remain muted. As per the consensus, the core PCE index is seen 10 bps higher at 4.7% than the prior release.

     

  • 06:07

    Gold Price Forecast: XAU/USD to confirm a bottom once above $1,674-75

    Gold struggles to capitalize on its goodish rebound from more than a two-year low touched earlier this week. XAU/USD needs to make it through $1,674-75 hurdle to confirm a bottom, FXStreet’s Haresh Menghani reports.

    Any meaningful pullback might continue to find decent support around $1,645-$1,643

    “Gold might accelerate the momentum towards the $1,674-$1,675 supply zone. The latter also marks a confluence hurdle, comprising the 50% Fibo. level and the 100-period SMA on the 4-hour chart. Sustained strength beyond could trigger a short-covering move and allow bulls to aim back to reclaim the $1,700 round-figure mark.”

    “Any meaningful pullback might continue to find decent support near the overnight swing low, around the $1,645-$1,643 region, which coincides with the 23.6% Fibo. level. The next relevant support is pegged near the $1,620-$1,615 region, or the YTD low. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag gold towards the $1,600-$1,590 area.”

  • 06:04

    USD/CAD slips to near 1.3700 as focus shifts to US PCE and Michigan CSI data

    • USD/CAD has surrendered the immediate support of 1.3700 as the DXY has eased off its intraday gains.
    • The impact of US PCE is expected to remain weak as the market has already reacted to standard CPI data.
    • Along with the weaker DXY, Canadian dollar is also fragile, which is supporting the asset on a broader basis.

    The USD/CAD pair has witnessed a mild correction after hitting a day’s high of around 1.3724 in the early European session. On a broader note, the asset is displaying topsy-turvy moves in a 1.3656-1.3756 range after a pullback move from 1.3600. The asset has not reached much, like the other pairs, to the sheer weakness in the US dollar index (DXY), which indicates that the Canadian dollar is extremely fragile.

    Meanwhile, the US dollar index (DXY) has surrendered the critical support of 112.00 and is declining sharply to test the intraday low at 111.73. The DXY is declining despite the higher consensus for the US Personal Consumption Expenditure (PCE) price index data.

    As per the estimates, the headline PCE inflation will advance to 6.6% from the prior release of 6.3%, despite a sheer decline in gasoline prices. Also, the core PCE is seen higher at 4.7% vs. the prior release of 4.6%. That could be the case of rising interest rates’ consequences as corporate is passing on the impact of a higher cost of capital to the final consumers.

    The impact of PCE data is expected to remain weak as the market participants have already reacted to September’s Consumer Price Index (CPI) data, therefore its impact seems less reactive.

    Apart from that, the US Michigan Consumer Sentiment Index (CSI) data will be of utmost importance. The sentiment data is seen as stable at 58.5.

    On the loonie front, upbeat monthly Gross Domestic Product (GDP) data has failed to support the loonie bulls. The Canadian economy has grown by 0.1% vs. the de-growth of 0.1%.  

     

  • 06:03

    UK Q2 GDP improved to 0.2% QoQ, 4.4% YoY figures, GBP/USD retreats below 1.1150

    UK’s final reading of the second quarter (Q2) Gross Domestic Product (GDP) offered a positive surprise on early Friday.

    That said, the Q2 GDP improved to 0.2% QoQ versus -0.1% previous forecasts while the YoY figures increased to 4.4% versus 2.9% prior estimations.

    Further details suggest that the UK’s Q2 Current Account deficit eased to £-33.768B compared to £-43.8B market forecasts and £-43.875B prior (revised from £-51.3B).

    GBP/USD fails to cheer upbeat data

    GBP/USD pares intraday gains after the upbeat UK data. That said, the cable pair drops to 1.1132 by the press time, up 0.13% on a day.

    Also read: GBP/USD Price Analysis: Teases sellers above 1.1055 support, US PCE Inflation, UK GDP eyed

  • 06:02

    United Kingdom Nationwide Housing Prices s.a (MoM) came in at 0%, below expectations (0.3%) in September

  • 06:02

    United Kingdom Total Business Investment (YoY) above expectations (5%) in 2Q: Actual (5.2%)

  • 06:02

    United Kingdom Gross Domestic Product (YoY) above expectations (2.9%) in 2Q: Actual (4.4%)

  • 06:02

    United Kingdom Total Business Investment (QoQ) below forecasts (3.8%) in 2Q: Actual (3.7%)

  • 06:02

    United Kingdom Nationwide Housing Prices n.s.a (YoY) came in at 9.5% below forecasts (10%) in September

  • 06:01

    United Kingdom Current Account came in at £-33.768B, above expectations (£-43.8B) in 2Q

  • 06:01

    United Kingdom Current Account came in at £-33.8B, above forecasts (£-43.8B) in 2Q

  • 06:01

    United Kingdom Gross Domestic Product (QoQ) above expectations (-0.1%) in 2Q: Actual (0.2%)

  • 06:01

    Denmark Gross Domestic Product (YoY) rose from previous 3.6% to 3.9% in 2Q

  • 06:00

    Denmark Gross Domestic Product (QoQ) remains at 0.9% in 2Q

  • 06:00

    Denmark Unemployment Rate remains unchanged at 2.3% in August

  • 05:41

    Crude Oil Futures: Extra weakness not ruled out

    CME Group’s flash data for crude oil futures markets noted traders reduced their open interest positions for the fourth consecutive session on Thursday, this time by around 5.5K contracts. Volume followed suit and reversed two straight builds and shrank by around 184.3K contracts.

    WTI could retest monthly lows near $76.00

    Prices of the barrel of WTI charted and inconclusive session on Thursday. The move was on the back of declining open interest and volume and exposes some lack of direction in the very near term, while the resumption of the previous downtrend should not be ruled out. Against that, another visit to the September low at $76.28 (September 26) remains in the pipeline.

  • 05:40

    USD/CHF Price Analysis: Sellers attack key support line below 0.9800 amid looming bear cross

    • USD/CHF pauses three-day downtrend near the fortnight-old support line.
    • Bearish MACD signals join immediate resistance line to keep sellers hopeful.
    • 100-SMA’s clear downside break of 200-SMA could reject short-term bullish bias.

    USD/CHF pokes a two-week-old support line on its way to post the first weekly loss in three, pressured near 0.9760 heading into Friday’s European session.

    It’s worth noting that the bearish MACD signals and an impending bear cross between the 100-SMA and the 200-SMA favor the pair sellers of late. That said, the bear cross is a moving average crossover that suggests further downside when short-term SMA dips beneath the longer-term moving average.

    However, a clear downside break of the aforementioned support line, at 0.9745 by the press time, becomes necessary for the USD/CHF bears to keep the reins. Even so, the convergence of the stated SMAs could test the downside move near 0.9700 before giving control to the sellers.

    On the flip side, a downward slopping resistance line from Wednesday, close to 0.9800 by the press time, guards the quote’s immediate recovery.

    Following that, the early September peak surrounding 0.9870 could challenge the USD/CHF bulls before directing them to the monthly high of 0.9965.

    In a case where the pair buyers stay hopeful past 0.9965, the 1.0000 psychological magnet will be in focus.

    USD/CHF: Four-hour chart

    Trend: Further weakness expected

     

  • 05:30

    Japan Construction Orders (YoY) came in at 17.9%, above forecasts (5.7%) in August

  • 05:28

    GBP/USD: A visit to 1.1300 appears unlikely for now – UOB

    Further upside in GBP/USD looks on the cards, although another visit to 1.1300 seems out of favour for the time being, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

    Key Quotes

    24-hour view: “The strong surge in GBP came as a surprise (we were expecting range-trading).  GBP closed on a strong note at 1.1119 (+2.13%) and continues to advance in early Asian trade. The rapidly improving upward momentum suggests GBP could continue to rise. That said, conditions are overbought and a break of 1.1300 is unlikely (there is another resistance at 1.1250). On the downside, a breach of 1.1050 (minor support is at 1.1100) would indicate that the current upward pressure has subsided.”

    Next 1-3 weeks: “Yesterday (29 Sep, spot at 1.0825), we noted downward momentum has waned and we were of the view that the probability of GBP dropping to 1.0000 has diminished considerably. That said, we did not quite expect the strong surge as GBP soared by 2.13% and closed at 1.1119 in NY. The breach of our ‘strong resistance’ level 1.1000 indicates that the weakness in GBP from more than 2 weeks ago (see annotations in the chart below) has bottomed for now. The current strong rebound has scope to extend but at this stage, the resistance at 1.1300 is unlikely to come under challenge. Overall, only a breach of 1.0800 (‘strong support’ level) would indicate that the rapid build-up in short-term momentum has eased.”

  • 05:23

    Gold Futures: Probable correction in the offing

    Open interest in gold futures markets resumed the downside and shrank by around 3.2K contracts on Thursday, according to preliminary readings from CME Group. In the same line, volume dropped by around 90.3K contracts, offsetting the previous day’s build.

    Gold: Upside looks capped by $1,688

    Thursday’s small uptick in prices of the ounce troy of gold was accompanied by shrinking open interest and volume, opening the door to some corrective move in the very near term. In the meantime, the weekly high at $1,688 (September 21) continue to cap the upside for the time being.

  • 05:17

    USD/IDR marches towards $15,300 despite subdued DXY, US PCE in focus

    • USD/IDR is advancing towards $15,300 as BI’s hawkish policy has failed to support the Indonesian Rupiah.
    • Economists believe that BI’s hawkish policy and modest intervention will settle it around $15,000.
    • DXY’s investors are awaiting the release of the US PCE and Michigan CSI data.

    The USD/IDR pair is attempting to overstep the critical hurdle of $15,275 in the Tokyo session. The asset is extremely bullish despite the meaningful correction in the US dollar index (DXY), which has already dragged the asset to near 112.00. The major is aiming to hit the ultimate target of $15,300 sooner despite the tailwinds of soaring interest rates by the Bank of Indonesia (BI).

    In September’s monetary policy meeting, BI Governor Perry Warjiyo hiked the interest rates by 50 basis points (bps). The focus of the BI is to bring stabilization in the Indonesian Rupiah in the ongoing volatile environment.

    Economists at ANZ Bank forecast USD/IDR at 15,000 by the end of the year and expect the policy rate to peak at 5.75% in Q2 2023. A modest intervention in the currency markets by the BI has managed to bring some stability to the Indonesian Rupiah.

    Meanwhile, Edi Susianto, head of BI's monetary management department, told that the central bank would prioritize policies, which should support the market mechanism. He further cited that the BI has no need for capital controls, as reported by Reuters.

    On the US dollar index (DXY) front, the DXY is likely to remain on the tenterhooks ahead of the release of the US Personal Consumption Expenditure (PCE) data. The economic data is seen higher at 4.7%, 10 bps above the prior release. Apart from that, US Michigan Consumer Sentiment Index (CSI) data will also remain in focus. The sentiment data is expected to remain steady at 58.5.

     

  • 05:12

    EUR/USD eyes consecutive fourth monthly loss as options market holds bearish bias

    EUR/USD grinds lower around the intraday bottom of 0.9800 while staying on the way to posting the first weekly gain in three. Even so, the major currency pair prints a four-month downtrend heading into Friday’s European session.

    That said, the market’s fears of recession and the central banks’ aggression might have favored the medium-term bears. However, the cautionary mood ahead of the key US/EU inflation data joins the quarter-end positioning to offer the latest gains.

    Also read: EUR/USD pares first weekly gain in three around 0.9800 ahead of EU/US inflation data

    It should be noted that the one-month risk reversal (RR) on the Euro, a gauge of calls to puts, prints the biggest daily figure in two weeks with the latest daily RR number of 0.165, per the latest data provided by Reuters. However, the weekly figure is still in the red while flashing the second negative print of -0.290 by the press time.

    Furthermore, the monthly and quarterly RR numbers are also in favor of the EUR/USD sellers while registering -0.370 and -0.170 levels, per Reuters.

    Given the broadly bearish bias of the options market, the EUR/USD prices are likely to fade from the recent corrective bounce off the 20-year low.

  • 05:04

    Japan Housing Starts (YoY) came in at 4.6%, above expectations (-4.1%) in August

  • 05:00

    Japan Consumer Confidence Index registered at 30.8, below expectations (31.2) in September

  • 05:00

    EUR/USD faces some consolidation within 0.9630-0.9950 – UOB

    FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang note EUR/USD is now expected to navigate within 0.9630 and 0.9950 in the next few weeks.

    Key Quotes

    24-hour view: “We expected EUR to ‘trade sideways between 0.9620 and 0.9750’ yesterday. Our view was incorrect as EUR dropped to 0.9634 before surging higher to close at 0.9814 (+0.82%). EUR extended its advance in early Asian trade. The rapidly improving upward momentum is likely to lead to further advance to 0.9880 before a pullback is likely. The next resistance at 0.9950 is unlikely to come into view. On the downside, a breach of 0.9740 (minor support is at 0.9780) would indicate that the current upward pressure has eased.”

    Next 1-3 weeks: “We have held a negative EUR view for more than 2 weeks now. After EUR dropped to 0.9530 and rebounded strongly, we indicated yesterday (29 Sep, spot at 0.9705) that ‘there is still a slim chance for EUR to drop to 0.9500’. EUR subsequently soared and took out our ‘strong resistance’ level at 0.9750. The breach of the ‘strong resistance’ level indicates that the USD weakness has stabilized. EUR appears to have moved into a consolidation phase and is likely to trade between 0.9630 and 0.9950 for now.”

  • 04:53

    Asian Stock Market: Braces for the worst month since pandemic as recession woes amplify

    • Asia-Pacific shares eye the biggest monthly drop since March 2020.
    • Fears of economic slowdown, hawkish central bank weighs on equities.
    • Recent data from China, Japan fail to impress traders amid pre-inflation release anxiety in the market.

    Asia-Pacific stocks remain pressured heading into the last European trading day of the worst month in 2.5 years. The region’s equities brace for the biggest monthly loss since March 2020 as traders fear grim conditions ahead, mainly due to the fears of higher rates and a lack of economic optimism.

    While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan drop near 12.5% in a month to print the biggest monthly loss since March 2020, up 0.20% intraday. That said, Japan’s Nikkei dropped 2.15% on a day despite firmer activity data from Japan and stimulus hopes.

    Further, equities from China, Australia and New Zealand were in the red as the dragon nation flashed mixed activity data while also raising doubts on the Chinese authorities’ market interventions. Elsewhere, Hong Kong shares were likely heading for their worst quarter since 2001 and Chinese blue-chips might also finish September by recording their biggest quarterly loss since a stock market meltdown in 2015, per Reuters.

    It’s worth noting that South Korea’s KOSPI and Indonesia’s IDX Composite print mild losses as India announced less than feared rate hikes.

    On a different page, gold prices grind higher while the US Dollar Index (DXY) trace yields to defend buyers, despite bracing for the first weekly loss in three. Additionally, WTI crude oil stays ready to snap a four-week downtrend, retreating of late.

    Moving on, the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for August, expected 4.7% YoY versus 4.6% prior, appears crucial for the market players for short-term directions. Also important will be the Eurozone HICPI and CPI details for September. Above all, risk catalysts will be crucial for near-term directions as firmer inflation data could weigh on the equities and roil the mood.

  • 04:44

    India RBI Interest Rate Decision (Repo Rate) in line with expectations (5.9%)

  • 04:33

    AUD/USD drops below 0.6500 as DXY defends 112.00, RBA policy hogs limelight

    • AUD/USD has fallen below 0.6500, however, the upside remains favored.
    • The RBA is expected to sound mildly hawkish as the optimal terminal rate is not so far.
    • US core PCE price index is likely to land 10 bps higher at 4.7%.

    The AUD/USD pair has slipped below the psychological support of 0.6500 after failing to test Thursday’s high at 0.6525. The decline in the asset is gradual as the upside bias is intact and amid an overall weakness in the US dollar index (DXY). In the Asian session, the DXY attempted to defend the establishment below 112.00, which resulted in a minor correction in the antipodean.

    A lackluster performance is highly expected from the asset as investors are awaiting the announcement of October’s monetary policy decision by the Reserve Bank of Australia (RBA). RBA monetary policy minutes released on September 20 displayed that the policymakers also considered a rate hike of 25 basis points (bps), although an announcement was made for the fourth consecutive 50 bps hike. And, RBA Governor Philip Lowe is expecting the Official Cash Rate (OCR) to top around 3.85%.

    Meanwhile, downbeat Caixin Manufacturing PMI data has failed to impact the aussie bulls. The economic data has landed at 48.1, lower than the expectations and the prior release of 49.5.

    It is worth noting that Australia is a leading trading partner of China and a weaker-than-projected Caixin Manufacturing PMI data carries a significant impact on Australian exports.

    On the US dollar index (DXY) front, the DXY has managed to defend sustainability below 112.00 for the time being. Clouds of pessimism over the US dollar index (DXY) have not faded yet and the pullback move could be terminated, which will resume the downside journey.

    In today’s session, investors will focus on the core Personal Consumption Expenditure (PCE) price index data, which is seen higher at 4.7%, 10 bps above the prior release.

     

  • 04:30

    Netherlands, The Retail Sales (YoY) rose from previous 3.2% to 3.7% in August

  • 04:22

    Gold Price Forecast: XAU/USD awaits Fed’s preferred inflation gauge near $1,660

    • Gold price fades upside momentum during the first positive week in three, grinds higher of late.
    • Pre-data anxiety, mixed sentiment test XAU/USD buyers, firmer yields also restricts upside momentum.
    • Strong inflation numbers could pare gold’s weekly gains amid hawkish central banks, recession woes.

     

    Gold price (XAU/USD) remains sidelined around the weekly tops, taking rounds to $1,660 during early Friday morning in Europe, as traders await the key data from the Fed’s preferred inflation gauge. Also challenging the metal prices could be the mixed sentiment and risk catalysts, as well as the quarter-end positioning.

    That said, the recently printed mixed activity data from China, one of the major gold consumers, act as the immediate catalyst to limit the XAU/USD moves. That said, China’s official NBS Manufacturing PMI rose to 50.1 versus 49.6 expected and 49.4 prior while the Non-Manufacturing PMI declined to 50.6 compared to 52.0 market forecasts and 52.6 prior readings.  Further, China's Caixin Manufacturing PMI dropped to 48.1 during the stated month versus 49.5 expected and prior.

    On the other hand, news that the dragon nation eased FX restrictions in response to the Fed rate rise, shared by the Financial Times (FT), contrasts the fears of a recession in Beijing to challenge momentum traders.

    Elsewhere, hawkish central bankers and fears of recession underpin the Treasury yields but the US dollar struggles to regain upside momentum amid the quarter-end positioning. That said, the US Dollar Index (DXY) remains mildly bid around 112.10 while bracing for the first weekly loss in three. It should be noted that the stock futures and the Asia-Pacific equities also trade mixed as markets await the key US and European inflation numbers.

    Additionally, the geopolitical tension between Russia and Ukraine joins the Sino-American tussles and the West versus Moscow problems to challenge the XAU/USD upside. On the contrary, the recent stimulus from the UK and Japan seems to help the risk-takers.

    To sum up, the gold price anxiously awaits the US and Eurozone inflation data for clear directions.

    Also read: US August PCE Inflation Preview: Will it trigger a dollar correction?

    Technical analysis

    Gold price retreats from a 12-day-old descending resistance line, attacking the weekly triangle’s bottom near $1,660 by the press time. While the steady RSI and recently sluggish MACD hint at further grinding of the XAU/USD, the 50-SMA level around $1,652 act as an extra filter for the bear’s entry.

    Following that, $1,642 and the latest swing low, also the yearly low of $1,614, could challenge the metal sellers.

    It should be noted, that the commodity’s weakness past $1,614 will be challenged by the $1,600 threshold and a downward sloping support line from September 16, close to $1,605 at the latest.

    Alternatively, an upside clearance of the immediate resistance line near $1,663 must cross the triangle’s upper line, at $1,671 as we write, to convince gold buyers. In that case, a run-up towards $1,688 and the $1,700 becomes imminent.

    Gold: Four-hour chart

    Trend: Limited upside expected

     

  • 03:52

    USD/JPY Price Analysis: Brace for a volatility expansion sooner

    • Bets are turning towards the greenback bulls as the pair has not accelerated in the recent DXY’s correction.
    • The 50 and 200-EMAs continue to march north, which adds to the upside filters.
    • The RSI (14) is still serving the 40.00-60.00 range that advocates consolidation.

    The USD/JPY pair is displaying a slowdown in the upside momentum after reaching around 144.80 in the Tokyo session. Earlier, the asset rebounded firmly after dropping to near 144.30. Broadly, the major is displaying topsy-turvy moves as investors are awaiting a potential trigger for informed action.

    On a four-hour scale, the major is auctioning in an inventory adjustment process, which indicates a tad longer consolidation period. It is critical to state that the adjustment process is an accumulation or distribution by institutional investors.

    This week, the US dollar index (DXY) witnessed an intense sell-off while risk-perceived currencies were having a ball. However, the USD/JPY pair didn’t display any weakness and remained firmer. It indicates that the yen bulls are extremely fragile against the greenback bulls and even a decent pullback move ahead will deliver an upside break of the inventory adjustment process.

    The 50-and 200-Exponential Moving Averages (EMAs) at 144.00 and 141.40 respectively are advancing higher, which signifies that the upside bias is intact.

    While, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates a consolidation ahead.

    The greenback bulls could drive the asset higher after overstepping the previous week’s high at 145.90, which will drive the asset towards the August 1998 high at 147.67. A breach of the latter will send the major towards the psychological resistance of 150.00.

    For a decisive bearish reversal, the asset is required to drop below the previous week’s low at 140.35. An occurrence of the same will drag the asset towards the August 30 low at 138.05 followed by the August 23 low at 135.81.

    USD/JPY four-hour chart

     

     

  • 03:22

    AUD/NZD rebounds towards 1.1360, focus shifts to RBA/RBNZ monetary policy

    • AUD/NZD has picked bids around 1.1330 but seems to remain lackluster ahead of policy meetings.
    • Both RBA and the RBNZ will announce their monetary policies next week.
    • The RBA is not expected to sound extremely hawkish while the RBNZ will continue its 50 bps hike pattern.

    The AUD/NZD pair has recovered sharply after picking bids near 1.1327 in the Tokyo session. The asset is expected to test the downside break of the consolidation formed in a range of 1.1364-1.1412. On a broader note, the cross has corrected sharply after surrendering the round-level cushion of 1.1400. The asset is expected to remain on the sidelines ahead of the interest rate decision by the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ).

    The monetary policy meeting of the RBA is scheduled for Tuesday and RBA Governor Philip Lowe is not expected to sound extremely hawkish considering their options for the extent of the rate hike considered in the September meeting. As per RBA minutes, the RBA announced a fourth consecutive rate hike of 50 basis points (bps) but also considered the option of 25 bps.

    The official Cash Rate (OCR) was pushed to 2.35% in September monetary policy meeting. RBA Governor Philip Lowe is continuously accelerating the OCR to scale down the soaring price pressures. The Australian inflation rate has already increased to 6.1%, reading belongs to the second quarter of CY2022.

    Apart from that, the RBA policymakers cited that the OCR is expected to peak around 3.85% and the inflation rate will top around 7%. With the current pace of hiking the OCR by 50 bps, the central bank will reach the desired target by December 2022.

    On the kiwi front, a Reuters poll on the RBNZ rate hike forecast, scheduled on Wednesday, claims a fifth consecutive rate hike by 50 basis points (bps). A fifth half-a-percent rate hike by the RBNZ Governor Adrian Orr will push the Official Cash Rate (OCR) to 3.5%. It would be worth watching whether an OCR above 3% is sufficient to anchor the galloping inflation.

     

     

     

  • 03:09

    China loosened FX restrictions in response to Fed rate rise – FT

    Officials from the State Administration of Foreign Exchange (SAFE) privately communicated a relaxation of the informal limits on transaction in China's interbank market to foreign exchange brokers on Wednesday last week due to the Fed's interest rate rise of 0.75 percentage points, the Financial Times reported, citing two people familiar with the matter.

    The news also mentioned that the renminbi's sharp fall over the past week started after regulators told traders that they were relaxing the foreign exchange trading limits.

    The report, citing one of the people said the move to relax was made because policymakers "believed it was the proper time to let the renminbi depreciate a bit".

    Market reaction

    The news should have favored the USD/CNH prices to regain upside momentum after two loss-making days. That said, the offshore Chinese yuan (CNH) pair prints 0.26% intraday gains around 7.1150 by the press time.

    Also read: USD/CNH Price Analysis: Snaps two-day downtrend around 7.1300 after China PMIs

  • 03:06

    Japan’s Matsuno: Want to compile extra budget swiftly after econ package in late October

    Japanese Chief Cabinet Secretary Hirokazu Matsuno crossed wires, via Reuters, in early Friday while suggesting more stimulus from the Asian major.

    Key quotes

    Will consider further support for hard-hit consumers, businesses in view of higher energy, food prices.

    Will also consider steps to promote wage hikes.

    Japan will continue to engage with the g7 and international community to take strong measures against Russia and to support Ukraine.

    Russia's intended annexation cannot be permitted and is illegal under international law.

    North Korea may engage in a further provocative manner.

    FX reaction

    The news struggles to impress market players amid fears of recession and hawkish central bank actions, not to forget the cautious mood ahead of the key EU/US data.

    Also read: USD/JPY remains lackluster below 144.50 despite upbeat Japanese data

  • 02:59

    GBP/USD Price Analysis: Teases sellers above 1.1055 support, US PCE Inflation, UK GDP eyed

    • GBP/USD struggles to extend two-week-old resistance breakout as 100-EMA tests buyers.
    • Pre-data anxiety, nearly overbought RSI (14) challenge immediate upside.
    • Sellers need validation from two-day-old support, scheduled data to retake control.

    GBP/USD struggles for clear directions around the weekly top after a three-day uptrend as traders await the key statistics from the US and the UK during Friday. That said, the quote currently seesaws between the 100-EMA and the resistance-turned-support line while taking rounds to 1.1120.

    It’s worth noting that the nearly overbought RSI conditions join the 100-EMA and the previous resistance line to challenge the pair’s latest moves, as well as the pre-data anxiety.

    Also read: GBP/USD pause on the way to 1.1200 ahead of UK GDP, US PCE Inflation

    It should be noted, however, that the comparative fundamental challenges for the UK and a seven-week-old resistance line portray the bearish bias for the GBP/USD pair.

    Hence, sellers should be on the lookout for entries on a clear downside break of the immediate support line, near 1.1055 by the press time. Following that, an upward sloping support line from Wednesday, near 1.0965, could challenge the pair’s further downside.

    Alternatively, an upside clearance of the 100-EMA hurdle, around 1.1195 at the latest, could aim for the downward sloping resistance line from August 10, near 1.1455 now.

    If at all the GBP/USD buyers manage to cross the 1.1455 hurdle, the monthly high surrounding 1.1740 will be on their radar.

    GBP/USD: Four-hour chart

    Trend: Pullback expected

     

  • 02:42

    EUR/USD pares first weekly gain in three around 0.9800 ahead of EU/US inflation data

    • EUR/USD retreats from the short-term key hurdle to snap two-day uptrend.
    • Market sentiment remains dicey but yields stay firmer amid fears of recession.
    • ECB hawks battle upbeat Fedspeak to defend the recovery despite the energy crisis in the bloc.
    • Firmer US inflation gauge may add strength to the pullback moves.

    EUR/USD takes offers to renew intraday low around 0.9800 as bulls take a breather after a two-day uptrend around the weekly top. Even so, the major currency pair remains positive on a weekly basis, snapping a two-week downtrend. The quote’s latest weakness could be linked to the cautious sentiment ahead of the key inflation numbers from Eurozone and the US.

    Eurozone is up for publishing the preliminary inflation data for September. The CPI and HICP figures become all the more important after Germany refreshed the record high during the previous day and the European Central Bank (ECB) policymakers are ready to inflate the benchmark rates even at the risk of a recession.

    Among the key policymakers were Olli Rehn, Mario Centeno and Pablo Hernandez de Cos, who have recently backed the idea of increasing the benchmark rate by 0.75%. “ECB policymakers voiced more support on Thursday for another big interest rate hike as inflation in the euro zone's biggest economy hit double digits, blasting past expectations and heralding another record reading for the bloc as a whole,” said Reuters in this regard.

    It should be noted that Germany’s Consumer Price Index (CPI) rose to 10% in September compared to 7.9% in August and the market expectation of 9.4. Additionally, the Harmonised Index of Consumer Prices (HICP) for the nation, the European Central Bank's (ECB) preferred gauge of inflation, jumped to 10.9% during the stated month compared to 8.8% prior and 10% expected. Furthermore, Eurozone Economic Sentiment Indicator (ESI) declined to 93.7 in September versus the market expectation of 95 and 97.3 in August. Also, the Consumer Confidence for the said month matched -28.8 forecasts and prior readings.

    On the other hand, the US economic calendar has the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for August, expected 4.7% YoY versus 4.6% prior.

    Also read: US August PCE Inflation Preview: Will it trigger a dollar correction?

    It should be that the US Weekly Initial Jobless Claims dropped to 193K for the period ended on September 24, versus the 209K previous (revised from 213K) and the market expectation of 215K, also might have weighed on the DXY. The US Jobless Claims slumped to the lowest levels since April.

    While respecting the data, St. Louis Federal Reserve Bank President James Bullard praised the slump in the weekly Initial Jobless Claims and mentioned, "We will push inflation to 2% in a reasonable compact time frame." Elsewhere, Federal Reserve Bank of Cleveland President Loretta Mester said on Thursday that they are not yet at a point where they could start thinking about stopping interest rate hikes, as reported by Reuters. Additionally,  San Francisco Fed President Mary Daly said that she expects to raise rates further in coming meetings, and early next year.

    Elsewhere, the chatters over China’s inability to tame recession woes and the UK’s fears of more economic pain, as well as the Russia-EU tussles, weigh on the EUR/USD prices and the market’s sentiment.

    Amid these plays, US 10-year Treasury yields remain firmer around 3.80% during the seven-week uptrend despite reversing from the 12-year on Wednesday while the S&P 500 Futures fade recovery from the multi-month low.

    To sum up, the EUR/USD pair is portraying the typical pre-data caution and can witness further downside if the US inflation figures offer a positive surprise.

    Technical analysis

    EUR/USD recently eased from the four-month-old support-turned-resistance, as well as the downward sloping resistance line from September 13, amid impending bull cross on the MACD and steady RSI (14). As a result, the buyers stay hopeful but need validation from 0.9830.

    On the contrary, the pair’s pullback moves may initially aim for the 10-DMA support near 0.9795 before targeting the 0.9690-75 support area.

     

  • 02:30

    Commodities. Daily history for Thursday, September 29, 2022

    Raw materials Closed Change, %
    Silver 18.815 -0.34
    Gold 1660.36 0.1
    Palladium 2200.03 2.47
  • 02:22

    USD/CNH Price Analysis: Snaps two-day downtrend around 7.1300 after China PMIs

    • USD/CNH crosses 200-HMA for the first time in two weeks after mixed China PMI data.
    • NBS Manufacturing PMI improved but Non-Manufacturing PMI and Caixin Manufacturing PMI eased in September.
    • Immediate bearish channel challenges upside momentum targeting the fresh record high.
    • MACD, RSI conditions join the key HMA breakout to favor buyers.

    USD/CNH picks up bids to add gains to the first daily positive in three after China’s mixed activity data for September, published early Friday. That said, the quote renews intraday high around 7.1300 by the press time.

    China’s official NBS Manufacturing PMI rose to 50.1 versus 49.6 expected and 49.4 prior while the Non-Manufacturing PMI declined to 50.6 compared to 52.0 market forecasts and 52.6 prior readings.  Further, China's Caixin Manufacturing PMI dropped to 48.1 during the stated month versus 49.5 expected and prior.

    In addition to the unimpressive activity numbers but a clear rebound from the 61.8% Fibonacci retracement of the pair’s September 19-28 advances and the run-up beyond the 200-HMA for the first time in 13 days also lure USD/CNH buyers.

    However, a downward sloping trend channel from Wednesday restricts immediate USD/CNH recovery, with its resistance line standing near 7.1630 by the press time.

    Should the quote rises past 7.1630, the odds of witnessing a rally towards the recent record high near 7.2660 can’t be ruled out.

    Alternatively, pullback moves may initially aim for the 61.8% Fibonacci retracement level, also known as the golden ratio, around 7.0950.

    Following that, the stated nearby channel’s support line, close to 7.0650, could challenge the USD/CNH pair’s further weakness.

    USD/CNH: Hourly chart

    Trend: Further upside expected

     

  • 02:04

    AUD/JPY fades recovery around 94.00 as firmer yields join indecisive China PMIs

    • AUD/JPY grinds higher to defend the first weekly gain in three.
    • China’s PMIs came in mixed for September, statistics from Japan came in firmer.
    • Yields remain firmer amid hawkish central banks, recession woes.
    • Risk aversion may challenge the recovery moves amid a cautious session.

    AUD/JPY buyers flirt with the 94.00 threshold while snapping a two-week downtrend during Friday’s Asian session. In doing so, the cross-currency pair cheers firmer yields while paying a little heed to the mixed data from Australia’s biggest customer China, as well as firmer economics from Japan.

    That said, China’s official NBS Manufacturing PMI rose to 50.1 versus 49.6 expected and 49.4 prior while the Non-Manufacturing PMI declined to 50.6 compared to 52.0 market forecasts and 52.6 prior readings.  Further, China's Caixin Manufacturing PMI dropped to 48.1 during the stated month versus 49.5 expected and prior.

    On the other hand, Japan reported a decline in the Unemployment Rate to 2.5% in August while Industrial Production reversed the previous contraction of 2.0% with 5.1% YoY growth. Further, Retail Trade also improved to 4.1% YoY compared to 2.8% expected and 2.4% prior.

    It’s worth noting that the US 10-year Treasury yields remain firmer around 3.80% during the seven-week uptrend despite reversing from the 12-year on Wednesday. The fears surrounding global recession and the hawkish commentary from the key central banks, including the Federal Reserve, the Bank of England (BOE) and the European Central Bank (ECB), despite the recently downbeat economics and supply crunch fears, propel the bond coupons. Additionally, the chatters over China’s inability to tame recession woes and the UK’s fears of more economic pain due to the latest fiscal policies should have favored the US Treasury yields.

    It should be observed that the Bank of Japan’s (BOJ) likely inability to defend the yen despite recent market intervention appears to also favor the AUD/JPY prices. That said, the cautious optimism in the market, portrayed via mildly bid S&P 500 Futures seem to offer additional support to the risk-barometer pair.

    Having witnessed the reaction to a slew of data from Australia and Japan, the AUD/JPY traders may remain cautious ahead of the key data, namely Eurozone inflation for September and the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (PCE) Price Index for August.

    Technical analysis

    As the RSI (14) and the MACD both flash bearish signals, AUD/JPY upside appears difficult. Also challenging the bulls is a convergence of the 50-day EMA, the previous support line from May and a three-week-old resistance confluence, near 94.80.

    Meanwhile, 50% and 61.8% Fibonacci retracement of the pair’s May-September upside, respectively near 93.00 and 91.60, could challenge the downside moves.

     

  • 01:47

    NZD/USD aims to capture 0.5800 on upbeat Caixin Manufacturing PMI data

    • NZD/USD is aiming to smash the critical hurdle of 0.5800 as Caixin Manufacturing PMI soars.
    • China’s surprise purchase of government bonds will also strengthen kiwi exports.
    •  A fifth consecutive 50 bps rate hike is expected by the RBNZ.

    The NZD/USD pair has dropped marginally below 0.5730 in the Tokyo session after facing barricades around 0.5750. The asset is marching towards 0.5800 on upbeat China’s Caixin Manufacturing PMI data. The economic data has landed at 50.1, higher than the expectations and the prior release of 49.5.

    It is worth noting that New Zealand is a leading trading partner of China and upbeat Caixin Manufacturing PMI data has a significant impact on NZ's fiscal balance sheet.

    Apart from that, the Chinese Finance ministry is planning to issue government bonds worth 2.5 trillion yuan in the fourth quarter, as reported by Reuters. The decision is supposed to safeguard the markets from any further turmoil as the economy is not expected to display a decent growth rate amid zero tolerance for Covid-19 spread and the real estate crisis.  It will also support the kiwi export data.

    Next week, investors will focus on the interest rate decision by the Reserve Bank of New Zealand (RBNZ). Reuters poll on RBNZ rate hike forecast claims a fifth consecutive rate hike by 50 basis points (bps). A fifth half-a-percent rate hike by the RBNZ Governor Adrian Orr will push the Official Cash Rate (OCR) to 3.5%. It would be worth watching whether an OCR above 3% is sufficient to anchor the galloping inflation.

    Meanwhile, the US dollar index (DXY) is expected to decline further as it is facing barricades around 112.00 in the Tokyo session. The DXY has weakened after a consecutive decline in the US growth rate by 0.6%. Going forward, the Michigan Consumer Sentiment Index (CSI) data will be keenly focused. The sentiment data is expected to remain steady at 58.5.

     

  • 01:47

    China Caixin Manufacturing PMI 48.1 and below prior and expectations, AUD offered

    As reported by Reuters, China's factory activity contracted at a sharper pace in September as strict COVID lockdowns disrupted production and dampened sales, a private sector survey showed on Friday.

    ''Weakening global demand for Chinese goods also weighed heavily on the manufacturing sector, with new export orders shrinking at the fastest pace in four months.

    The Caixin/Markit manufacturing purchasing managers' index (PMI) fell more than expected to 48.1 in September from 49.5 in August, below the 50-point which marks separates growth from contraction on a monthly basis.

    Analysts in a Reuters poll had expected the reading would be unchanged from August.

    Surveyed firms attributed the COVID-19 epidemic as the greatest impact factor, the private survey said.''

    AUD/USD is falling towards the lowest levels of the session following the PMIs today, down to a low of 0.6489 at the time of writing. 

  • 01:46

    China Caixin Manufacturing PMI registered at 48.1, below expectations (49.5) in September

  • 01:43

    AUD/USD jostles with 0.6500 hurdle on mixed China PMI data, US inflation eyed

    • AUD/USD stays defensive around yearly low after September’s activity data from the key customer.
    • China’s NBS Manufacturing PMI rose more than expected to 50.1, Non-Manufacturing PMI and Caixin Manufacturing PMI eased.
    • Market sentiment remains sluggish as traders await important statistics.
    • Risk-aversion, likely stronger US inflation can please bears.

    AUD/USD remains sidelined around 0.6500 as it pokes the resistance line of a bullish wedge during Friday’s Asian session. Even so, the quote remains on the way to printing the third weekly loss, as well as the biggest monthly downside in three. That said, the Aussie pair recently struggled amid mixed activity data for September from Australia’s biggest customer China.

    That said, China’s official NBS Manufacturing PMI rose to 50.1 versus 49.6 expected and 49.4 prior while the Non-Manufacturing PMI declined to 50.6 compared to 52.0 market forecasts and 52.6 prior readings. Further, China's Caixin Manufacturing PMI dropped to 48.1 during the stated month versus 49.5 expected and prior.

    Also read: Chinese Manufacturing PMI beats and supports AUD on the margin, services fall

    Other than the mixed data at home, fears of global recession and recently softer Aussie inflation data also challenge the AUD/USD buyers. “Investors added another cycle of selling after Fed officials gave no indication about the U.S central bank changing its view on rate hikes, leaving investors skittish about a potential recession in the country,” said Reuters.

    On Thursday, the first monthly CPI data from the Australian Bureau of Statistics (ABS) mentioned the headline price pressure eased in August to 6.8% from 7.0% in July.

    Earlier in the day, a Reuters poll suggested that the Reserve Bank of Australia (RBA) is likely to hike its interest rate by another 50 basis points in October in its most aggressive tightening cycle since 1990s to curb red-hot inflation.

    It should be noted that the softer US inflation expectations might have favored the AUD/USD buyers the previous day. That said, the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels since early 2021.

    Having witnessed the dismal reaction to China PMIs, AUD/USD traders may await the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for August, expected 4.7% YoY versus 4.6% prior. Should the US inflation gauge print upbeat numbers, the AUD/USD prices may witness further downside.

    Technical analysis

    Successful trading above 0.6500 could help AUD/USD to pare weekly loss as it will confirm the three-week-old falling wedge bullish chart pattern. Meanwhile, 0.6440 and the latest multi-month low near 0.6365 might return to the seller’s radar in case of a fresh downside. That said, MACD and RSI (14) join the downbeat fundamentals to challenge the bulls.

     

  • 01:38

    Chinese Manufacturing PMI beats and supports AUD on the margin, services fall

    China's PMIs have arrived as follows:

    • China's September official composite PMI 50.9
    • China's September official services PMI falls to 50.6 vs 52.6 in August
    • China's September official manufacturing PMI at 50.1 (Reuters poll 49.6) vs 49.4 in August

     Ongoing COVID-19 risks are set to continue impacting the official services PMI in September.

    The Caixin manufacturing PMI is also expected to confirm the broad-spread nature of the slowdown (market forecast: 49.5).

    AUD/USD is attempting to move higher on the data but has come under pressure again, balancing at 0.6497. 

    Why it matters to traders?

    The monthly manufacturing PMI is released by China Federation of Logistics and Purchasing (CFLP) on the last day of every month. The official PMI is released before the Caixin Manufacturing PMI, which makes it even more of a leading indicator, highlighting the health of the manufacturing sector, considered as the backbone of the Chinese economy. The data is of high relevance for the financial markets throughout several asset classes, given China’s influence on the global economy.

     

  • 01:37

    Australia Private Sector Credit (YoY): 9.3% (August) vs 9.1%

  • 01:31

    China Caixin Manufacturing PMI above expectations (49.5) in September: Actual (50.1)

  • 01:31

    China Non-Manufacturing PMI below expectations (52) in September: Actual (50.6)

  • 01:30

    Australia Private Sector Credit (MoM) in line with expectations (0.8%) in August

  • 01:30

    China NBS Manufacturing PMI came in at 50.1, above expectations (49.6) in September

  • 01:26

    EUR/JPY establishes above 142.00 despite upbeat Japanese data, German Retail Sales in focus

    • EUR/JPY has stabilized above 142.00 on soaring hawkish ECB bets.
    • The yen bulls have failed to capitalize on upbeat Japanese economic data.
    • Eurozone Consumer Confidence has remained in line with estimates and German Retail Sales may plunge ahead.

    The EUR/JPY pair has displayed a juggernaut rally after overstepping the round-level hurdle of 140.00. The asset is moving north vertically and has established above the immediate resistance of 142.00 in the Asian session. The cross has not sensed any selling pressure despite the release of upbeat Japanese economic data.

    Japan’s Unemployment Rate has justified the estimates of 2.5% and remained lower than the prior release of 2.6%. While the Jobs/Applicants Ratio improved to 1.32 vs. the forecasts of 1.30 and the former print of 1.29.

    Adding to that, the Retail Sales data has improved significantly to 4.1%, higher than the forecast of 2.8% and the prior figure of 2.4%. The retail demand seems upbeat in the Japanese economy, which is a result of the continuous injection of liquidity into the economy by the Bank of Japan (BOJ). The BOJ believes that the economy needs stimulus to revive the growth rate recorded in the pre-pandemic era. Also, Industrial Production has accelerated to 5.1% from a decline of 2% on an annual basis.  

    Meanwhile, the shared currency bulls are performing well after the hawkish commentary by the European Central Bank (ECB) President Christine Lagarde. The ECB is expected to tighten its policy further as it has come with specified guidance. The ECB will hike its interest rate by 125 basis points (bps) in the coming monetary policy meeting.

    On the economic front, the Eurozone Consumer Confidence has remained in line with the estimates and the prior release but is still worse at -28.8. Going forward, the German Retail Sales data will catch the spotlight. The economic data is expected to decline firmly by 5.1% vs. the prior release of a decline of 2.6% on an annual basis.

     

     

  • 01:18

    USD/CNY fix: 7.0998 vs. the previous fix of 7.1107

    In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 7.0998 vs. the previous fix of 7.1107, the prior close of 7.1210, and the estimated 7.0951.

    About the fix

    China maintains strict control of the yuan’s rate on the mainland.

    The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

    Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

  • 01:18

    USD/CAD Price Analysis: Inverted hammer, fortnight-long support line defends bulls above 1.3650

    • USD/CAD holds onto the previous day’s rebound, picks up bids of late.
    • Bullish candlestick formation, recovery from short-term support line favor buyers.
    • Weekly resistance line, overbought RSI challenge upside momentum.
    • 10-DMA adds to the downside filters before reversing the uptrend.

    USD/CAD defends the third consecutive weekly gain at around 1.3685 during Friday’s Asian session. In doing so, the Loonie pair justifies the previous day’s bullish candlestick formation, as well as a rebound from the 13-day-old support line, amid the price-positive MACD signals.

    With this, the quote is well-set to challenge the immediate hurdle, namely the weekly resistance line surrounding 1.3740, before aiming for the recently flashed multi-month high near 1.3835.

    It’s worth noting that the 1.3800 could act as an extra resistance that could join the overbought RSI (14) to challenge the USD/CAD buyers.

    If at all the pair remains firmer past 1.3835, the odds of witnessing a rally towards the 1.4000 psychological magnet can’t be ruled out.

    Meanwhile, pullback moves need to provide a daily closing below the stated support line, near 1.3660 by the press time.

    Even so, the 10-DMA level around 1.3560 could challenge the USD/CAD bears before giving them control.

    Overall, USD/CAD remains on the bull’s radar but the upside momentum appears limited.

    USD/CAD: Daily chart

    Trend: Further upside expected

     

  • 01:01

    Gold Price Forecast: XAU/USD marches towards $1,680 ahead of US PCE Inflation

    • Gold price is accelerating towards $1,680.00 as the DXY has extended its losses.
    • A consecutive decline in the US GDP numbers weakened the DXY.
    • US core PCE price index is expected to advance by 10 bps to 4.7%.

    Gold price (XAU/USD) is aiming to test the critical hurdle of $1,680.00 amid ongoing weakness in the US dollar index (DXY). The precious metal extended its recovery after sustaining above $1,650.00 and is expected to remain in the grip of bulls ahead. The yellow metal concluded its corrective move towards $1,640.00 and got strengthened after the US Gross Domestic Product (GDP) remained in line with the projections.

    The US GDP has consecutively declined by 0.6% on an annualized basis. It seems that the consequences of the bigger rate hikes by the Federal Reserve (Fed) have started showing their true colors. Bets were rising over a possible recession situation in the US but got vanished after the commentary from San Francisco Fed chief Mary Daly.

    Fed policymaker believes that the central bank is needed to drop focusing on generating more employment to tame the galloping inflation and not a recession, as reported by Reuters.

    Going forward, the US core Personal Consumption Expenditure (PCE) price index data will remain in focus. The economic data is expected to improve to 4.7% vs. the prior release of 4.6%. A higher-than-expected figure could propel the DXY to sum up its correction sooner.

    Gold technical analysis

    Gold prices have entered the prior balanced area, which is placed in a range of $1,653.30-1,692.00 on an hourly scale. The balanced area indicates the highest auction region where most of the trading activity took place.

    It is worth noting that the gold prices have crossed the 50-and 200-period Exponential Moving Averages (EMAs) while the EMAs have not displayed a crossover yet. This signals the strength of the upside momentum.

    Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which illustrates a continuation of upside momentum.

    Gold hourly chart

     

  • 00:53

    GBP/USD pause on the way to 1.1200 ahead of UK GDP, US PCE Inflation

    • GBP/USD struggles to extend the first weekly gain in three, grinds higher of late.
    • BOE policymakers’ aggression, sync between the UK government and the “Old Lady” favor buyers.
    • Downbeat US inflation expectations, quarter-end positioning adds strength to the pair’s rebound.
    • UK Q2 GDP may confirm recession woes and probe the bears, US inflation could also weigh on prices.

    GBP/USD seesaws around 1.1160-55 as buyers brace for the first weekly gain in three during Friday’s Asian session. In doing so, the cable pair cheers the broad US dollar weakness, as well as mixed concerns surrounding the US dollar ahead of the key data from the UK and the US.

    BOE Economist Huw Pill amplified pessimism surrounding Britain as the policymaker said, “It’s hard to avoid the conclusion that fiscal easing announced will prompt a significant and necessary monetary policy response in November.” Recently, UK Trade Secretary Kemi Badenoch stated that the chancellor is `working well' with the Bank of England.

    With this, the “Old Lady,” as the BOE is known sometimes, appears set for the strong rate hike cycle, which in turn propels the GBP/USD prices.

    On the other hand, US Dollar Index (DXY) remains on the back foot at around 111.90 while snapping a two-week uptrend. In doing so, the greenback’s gauge versus the six major currencies fails to justify the recently hawkish Fedspeak and the broad recession fears amid downbeat inflation expectations. This makes today’s Core Personal Consumption Expenditure (PCE) Price Index for August, expected 4.7% YoY versus 4.6% prior, important for the greenback traders.

    Also important to watch will be the final readings of the UK’s second quarter (Q2) Gross Domestic Product (GDP), expected to confirm -0.1% initial forecasts.

    Given the upbeat expectations from inflation and fears of economic slowdown in the UK, the GBP/USD could pare the latest gains if the scheduled data matches the forecasts.

    Also read: US August PCE Inflation Preview: Will it trigger a dollar correction?

    Technical analysis

    A clear upside break of a two-week-old resistance line, now support around 1.1035, needs to cross the 100-EMA hurdle surrounding the 1.1200 threshold, to keep GBP/USD buyers hopeful. It’s worth noting that the RSI is approaching the overbought territory and hence the upside potential appears limited.

     

  • 00:38

    RBNZ to carry on with 50 bps hike in October to break inflation trend – Reuters poll

    Reserve Bank of New Zealand (RBNZ) will deliver its fifth half-point interest rate hike on Wednesday and do the same in November in an attempt to stem the tide of rising inflation, the latest Reuters poll of economists predicted.

    Key findings

    All 24 economists in the Sept. 26-29 Reuters poll forecast the RBNZ would hike its official cash rate by 50 basis points to 3.50% at its Oct. 5 meeting.

    Nearly all economists have brought forward rate hike expectations from last month's poll and a majority, 17 of 22, now expected the OCR to reach 4.00% or above by end-2022, 50 basis points higher than August's poll.

    Current poll medians showed rates would remain unchanged at 4.00% until end-2023, not far from the RBNZ's projected terminal rate of 4.10%.

    But a strong minority of nearly 40% of economists expected rates to be higher than the predicted peak rate.

    Inflation was predicted to remain well above the RBNZ's target range of 1-3% until at least end-2023. It was expected to average 6.5% this year and then slip to 3.5% in 2023, higher than the 6.0% and 2.8% predicted in July.

    Economists also cautioned the risks to their inflation projection were skewed more towards faster price growth.

    Also read: NZD/USD Price Analysis: Bulls eye a run beyond the 'HotW' and eye 0.58 the figure

  • 00:34

    RBA to hike rates by 50bp in oct, peak rate pushed higher (RTRS poll)

    Australia's central bank will hike interest rates by another half-point on Tuesday and increase borrowing costs further than previously thought in its most aggressive tightening cycle since the 1990s to arrest red hot inflation, a Reuters poll showed.

    Meanwhile, a new monthly measure of Australian consumer prices on Thursday showed annual inflation eased slightly in August from July thanks to a steep drop in petrol prices, although inflation excluding volatile items accelerated. The job market has also remained tight with vacancies dipping slightly from all-time highs, adding to the case that the Reserve Bank of Australia will likely lift the official cash rate by another half point to 2.85% at its policy meeting on Tuesday.

    AUD/USD has been able to accumulate a bid on a softer US dollar of late, rallying towards the high of the week near 0.6535.

     

     

  • 00:30

    Stocks. Daily history for Thursday, September 29, 2022

    Index Change, points Closed Change, %
    NIKKEI 225 248.07 26422.05 0.95
    Hang Seng -85.01 17165.87 -0.49
    KOSPI 1.64 2170.93 0.08
    ASX 200 93 6555 1.44
    FTSE 100 -123.81 6881.59 -1.77
    DAX -207.73 11975.55 -1.71
    CAC 40 -88.14 5676.87 -1.53
    Dow Jones -458.13 29225.61 -1.54
    S&P 500 -78.57 3640.47 -2.11
    NASDAQ Composite -314.13 10737.51 -2.84
  • 00:22

    US Dollar Index eyes the first weekly loss in three near 112.00, US PCE Inflation in focus

    • US Dollar Index grinds lower around the weekly bottom.
    • US inflation expectations slumped to 18-month low, Q2 GDP confirmed 0.6% contraction.
    • Hawkish Fedspeak, recession woes and geopolitical concerns challenge DXY bears.
    • Firmer prints of Fed’s preferred inflation gauge could renew upside momentum.

    US Dollar Index (DXY) remains on the back foot around 111.90 while bracing for the first weekly loss in three during Friday’s Asian session.

    In doing so, the greenback’s gauge versus the six major currencies fails to justify the recently hawkish Fedspeak and the broad recession fears amid downbeat inflation expectations. This makes today’s Core Personal Consumption Expenditure (PCE) Price Index for August, expected 4.7% YoY versus 4.6% prior, important for the greenback traders.

    On Thursday, the final readings of the US Q2 Gross Domestic Product (GDP) confirmed the initial forecasts of -0.6%. It should be noted that the US Weekly Initial Jobless Claims, which dropped to 193K for the period ended on September 24, versus the 209K previous (revised from 213K) and the market expectation of 215K, also might have weighed on the DXY. The US Jobless Claims slumped to the lowest levels since April.

    Following the data, St. Louis Federal Reserve Bank President James Bullard praised the slump in the weekly Initial Jobless Claims and mentioned, "We will push inflation to 2% in a reasonable compact time frame." Elsewhere, Federal Reserve Bank of Cleveland President Loretta Mester said on Thursday that they are not yet at a point where they could start thinking about stopping interest rate hikes, as reported by Reuters. Additionally,  San Francisco Fed President Mary Daly said that she expects to raise rates further in coming meetings, and early next year.

    Elsewhere, recession woes amplified as the other key central banks, including the Bank of England (BOE) and the European Central Bank (ECB), also remain aggressive despite the recently downbeat economics and supply crunch fears. Additionally, the chatters over China’s inability to tame recession woes and the UK’s fears of more economic pain due to the latest fiscal policies should have favored the DXY but could not.

    The reason could be linked to the downbeat US inflation expectations, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, which dropped to the lowest levels since early March 2021.

    Amid these plays, the Wall Street benchmarks reversed all of the gains made on Wednesday while the Treasury yields recovered. Even so, the S&P 500 Futures print mild gains and weigh on the DXY amid a sluggish session ahead of the key US data.

    Also read: US August PCE Inflation Preview: Will it trigger a dollar correction?

    Technical analysis

    The DXY’s first daily closing below the 10-DMA, around 112.40 by the press time, in two weeks direct the sellers towards the previous resistance line near 111.45.

     

  • 00:20

    USD/JPY remains lackluster below 144.50 despite upbeat Japanese data

    • USD/JPY is oscillating below 144.50 as yen has failed to capitalize on Japanese data.
    • A broader improvement has been witnessed in employment, Retail Sales, and Industrial Production data.
    • The improved risk appetite of investors is weakening the DXY.

    The USD/JPY pair has not responded as expected despite the release of upbeat Japanese employment, Retail Sales, and Industrial Production data. The asset is displaying back-and-forth moves in a range of 144.30-144.84 in the Tokyo session. The major is displaying any signs of a decisive move and is awaiting a potential trigger.

    Japan’s Unemployment Rate has remained in line with the estimates of 2.5% but lower than the prior release of 2.6%. While the Jobs/Applicants Ratio has improved to 1.32 vs. the projections of 1.30 and the former print of 1.29.

    Meanwhile, the Retail Sales data has improved significantly to 4.1%, higher than the forecast of 2.8% and the prior figure of 2.4%. The retail demand seems upbeat in the Japanese economy, which is a result of the continuous injection of liquidity into the economy by the Bank of Japan (BOJ). The BOJ believes that the economy needs stimulus to revive the growth rate recorded in the pre-pandemic era. Also, Industrial Production has accelerated to 5.1% from a decline of 2% on an annual basis.

    BOJ’s continuation of an ultra-dovish monetary policy is constantly resulting in the depreciation of yen. Now, the recent announcement of an unscheduled bond-buying program has weakened yen further.

     Meanwhile, the US dollar index (DXY) is looking to establish below 112.00 amid an improvement in the risk appetite of the market participants. In today’s session, the US Michigan Consumer Sentiment Index (CSI) data will remain in focus. The sentiment data is expected to remain steady at 59.5.

     

     

     

  • 00:15

    Currencies. Daily history for Thursday, September 29, 2022

    Pare Closed Change, %
    AUDUSD 0.6498 -0.33
    EURJPY 141.806 1.1
    EURUSD 0.98168 0.87
    GBPJPY 160.64 2.45
    GBPUSD 1.11208 2.21
    NZDUSD 0.57243 -0.1
    USDCAD 1.36788 0.51
    USDCHF 0.97522 -0
    USDJPY 144.461 0.24
  • 00:09

    EUR/USD Price Analysis: Eyes further upside as bulls attack 0.9830 key hurdle

    • EUR/USD grinds higher around the weekly top, pokes key resistance confluence.
    • Previous support line from July, three-week-old resistance line constitute immediate hurdle.
    • The year 2001 high, descending support line from May challenge bears.
    • Looming bull cross on the MACD, steady RSI favor buyers.

    EUR/USD jostles with the key 0.9830 resistance confluence as bulls struggle to defend the first weekly gains in three during Friday’s Asian session.

    In doing so, the major currency pair battles the four-month-old support-turned-resistance, as well as the downward sloping resistance line from September 13.

    It should be noted, however, that the impending bull cross on the MACD and steady RSI (14) favor the buyers.

    That said, a clear upside break of the 0.9830 hurdle will propel the EUR/USD prices towards the 50-DMA, around 1.0035 by the press time. Also acting as the upside filters is the 1.0000 parity level and the monthly high near 1.0200.

    Meanwhile, the pair’s pullback moves may initially aim for the 10-DMA support near 0.9795 before targeting the 0.9690-75 support area.

    Following that, the year 2001 peak and the latest bottom, respectively around 0.9600 and 0.9535, could challenge the bears.

    If at all the EUR/USD pair remains weak past 0.9535, the downward sloping support line from May, near 0.9455, will be in focus.

    EUR/USD: Daily chart

    Trend: Further upside expected

     

  • 00:05

    NZD/USD Price Analysis: Bulls eye a run beyond the 'HotW' and eye 0.58 the figure

    • NZD/USD is breaking towards the 'High of the Week' (HotW) around 0.5755.
    • The hourly W-formation is a reversion pattern and a peak formation within the head and shoulders on the 4-hour time frame.
    • NZD/USD remains bullish while being supported by a rising trendline.

    NZD/USD is breaking fresh highs for the week as we approach the Tokyo open. The price has rallied to a session high of 0.5750 so far in a firm push through key technical resistance and the bulls will be liming up for a retest of the structure as support for an optimal entry in order to target higher levels yet. The following is an analysis of the daily and 4-hour charts, concluded on the hourly in order to pinpoint where the opportunities could be for traders in the day ahead. 

    NZD/USD daily chart

    The daily chart has run into the 38.2% Fibonacci resistance which is currently being broken at the time of writing. This leaves prospects of a strong correction towards the next layer of key structure near a 62% ratio as follows:

    NZD/USD H4 chart

    The bird is breaking through the neckline of an inverse head and shoulders which is bullish in itself. This is on the back of a correction to a 61.8% Fibo adding additional conviction to the upside bias. The bulls can have their sights set on 0.58 the figure/ A break of 0.5830 will open risk to 0.5850. 

    NZD/USD H1 chart

    Drilling down to an hourly perspective, this is where bulls will be looking for a discount:

    The W-formation is a reversion pattern and a peak formation within the head and shoulders on the 4-hour time frame, supported by a rising trendline. Should the trendline hold tests near a 50% mean reversion, this could attract a spur of demand from the bulls. However, that depends on the high of the week holding initial tests neat 0.5755. The bias will remain to the upside so long as the 0.5680s structure holds up. 

30 September 2022
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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